AMMD Amends Notes Exchange

American Medical Systems Holdings, Inc. (AMMD) amended its offer to exchange up to $250 million and a minimum of $100 million of its outstanding 3.25% Convertible Senior Subordinated Notes due 2036 for newly issued 3.75% Convertible Senior Subordinated Notes due 2041.

The amendment pertains to the coupon rate that was increased 25 basis points to 4.00%. The exchange offer will close on Sep 16, 2009 at midnight. All other terms and conditions for the exchange offer remain unchanged.

The exchange offer calls for exchange of each $1,000 principal amount of its new 3.75%, now 4.00%, Convertible Senior Subordinate Notes due 2041, for each $1,000 principal amount of its 2036 Notes. The 2041 Notes will be converted into cash or shares of the company's common stock at the same conversion rate and price as the 2036 Notes.

The terms and conditions of the exchange offer suggest that holders of 2041 Notes will have the right to compel the company to repurchase their notes at par on Sep 15, 2016, as opposed to Jul 1, 2013 in case of 2036 Notes.

We think that the delay of more than three years will enable the company to defer its debt repayment.

Headquartered in Minnetonka, Minnesota, American Medical Systems is a world leader in medical devices and procedures used to treat erectile dysfunction and other men's and women's health problems. Other men's health problems include incontinence, benign prostate hyperplasia, and stricture. Women's health problems include menorrhagia (excessive bleeding during menstruation), incontinence, and other pelvic floor defects.

The company competes with Johnson & Johnson (JNJ - Analyst Report) and Boston Scientific Corporation (BSX - Analyst Report).

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